China is preparing a massive change towards electric cars. The country with the largest auto market announced its plans to ban cars powered solely by diesel and gas sometime soon. The Chinese government is following the example of countries like India, France, Britain, and Norway who have already announced plans to phase out cars powered only by fossil fuels. With this news car makers are already moving forward with plans to accommodate the world’s second largest economy. Car manufacturers that have already entered the Chinese market like Ford and Volkswagen announced plans to develop fully electrical cars in China, and GM already sells the fully electric bolt in the US and Baojun in China. Volvo has already announced that it will begin producing only cars with electric motors starting in 2019.

With this major news coming from China, car manufacturers that have already made the move to electric are feeling the benefits of their preemptive actions. Tesla saw a jump of 5% in stock value after the Chinese announcement, and domestic producers like BAIC and BYD that are already working on fully electric vehicles saw jumps in stock value of up to 4.6%. Manufacturers cannot sit idle and ignore the world’s largest auto market. They will have to respond by starting development of new electric cars. Last year China accounted for 43% of all cars sold, and 96% of all electric cars sold. China said that in the short-term it is looking at having 5 million electric cars on its roads by 2020, and moving further it wants every car to eventually be fully electric. Major changes in markets, like the decision made by China, can shape an industry for years to come. Companies that choose to move forward can reap the benefits of changing times, and can grow their market shares, on the other hand those who struggle to change may be left behind and loose potential profits in the future. Innovation is key to staying relevant in the global market.